Correlation Between Perseus Mining and Bausch Health
Can any of the company-specific risk be diversified away by investing in both Perseus Mining and Bausch Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Perseus Mining and Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perseus Mining and Bausch Health Companies, you can compare the effects of market volatilities on Perseus Mining and Bausch Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Perseus Mining with a short position of Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perseus Mining and Bausch Health.
Diversification Opportunities for Perseus Mining and Bausch Health
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Perseus and Bausch is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Perseus Mining and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Perseus Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Perseus Mining are associated (or correlated) with Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Perseus Mining i.e., Perseus Mining and Bausch Health go up and down completely randomly.
Pair Corralation between Perseus Mining and Bausch Health
Assuming the 90 days trading horizon Perseus Mining is expected to under-perform the Bausch Health. But the stock apears to be less risky and, when comparing its historical volatility, Perseus Mining is 1.8 times less risky than Bausch Health. The stock trades about -0.14 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,139 in Bausch Health Companies on August 29, 2024 and sell it today you would lose (29.00) from holding Bausch Health Companies or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perseus Mining vs. Bausch Health Companies
Performance |
| Timeline |
| Perseus Mining |
| Bausch Health Companies |
Perseus Mining and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perseus Mining and Bausch Health
The main advantage of trading using opposite Perseus Mining and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perseus Mining position performs unexpectedly, Bausch Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bausch Health will offset losses from the drop in Bausch Health's long position.The idea behind Perseus Mining and Bausch Health Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bausch Health vs. Auxly Cannabis Group | Bausch Health vs. Entourage Health Corp | Bausch Health vs. iShares Canadian HYBrid | Bausch Health vs. Altagas Cum Red |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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